The socialist countries have generally modelled their rural institutions on those of the USSR in the 1930s. For the most part, means of production were owned by the so-called collective, farmwork was ‘collectively’ organized, and personal income ‘collectively’ distributed. At their peak, over one-third of the world’s farmers worked under this system.

‘Socialist’ countries have favoured collectives for the following principal reasons.

Firstly, the leadership in most ‘socialist’ countries initially was afraid of an economically independent peasantry with ideas shaped by individualistic ‘petty commodity production’. As Stalin put it: ‘a great deal of work has to be done to remould the collective-farm peasant, to correct his individualistic mentality and to transform him into a real working member of a socialist society’ (Stalin 1929, p. 469). Collectives were not intended as independent cooperatives: collectivization was party-led and collectives were subject to considerable external control (see e.g., Davies 1980; Volin 1970; Selden 1982; Unger 1984). Such a rationale is deeply undemocratic, especially given the peasants’ numerical dominance in those countries (see, in particular, Cohen 1974, ch. 6).

Second, it was believed that state intervention through party-led collectives would improve rural economic performance (see e.g., Stalin 1929; General Office 1956). Collectives could raise savings and investment rates through reinvesting income and mobilizing ‘surplus’ labour for capital construction. Unfortunately, success in these respects can damage labour motivation by reducing current returns to collective labour. Collectives also could provide a vehicle for rapidly introducing new technology. However, this applies to bad as well as good technology – examples of the former are legion in ‘socialist’ agriculture, including the various programmers in the Soviet Union associated with Lysenko (discussed in Volin 1970) and the ill-fated introduction of the double-wheeled, double-share plough, in China (Kuo 1972, ch. 12).

Third, party-led collectives were viewed as a means to attain high farm marketing rates and an outflow of farm sector savings to finance non-farm investment:

By transferring the disposal of agricultural output from individual peasants to government-supervised collective farm managements, collectivization destroys the basis for the peasants’ resistance to the ‘siphoning-off’ of the economic surplus (Baran 1957, p. 268).

However, without, for example, adequate supplies of appropriately priced industrial commodities, forcibly raising the rate of farm sector marketings can reduce the growth rate of farm output and the future volume of farm marketings. Moreover, it has proved difficult to achieve a net farm savings outflow due, for example, to agriculture’s need for industrial incentive goods and farm inputs (increased, insofar as inputs are inefficiently used and collectivization adversely affects livestock holdings, motive power and fertilizer supplies), and the state’s inability to control private market prices (Ellman 1975; Ishikawa 1967).

Fourth, it was considered that collectives would prevent ‘capitalist’ polarization alongside farm modernization, with the majority of peasants becoming wage labourers (Stalin 1929; Mao 1955). Evidence from other developing countries contradicts Stalin and Mao’s crude vision of rural class polarization (see, especially, Hayami and Kikuchi 1981). It indicates too that appropriate state policies (e.g. land reform, provision of education and credit, infrastructure construction, progressive taxation) can mitigate rural class inequalities. Class polarization is not the inevitable accompaniment of rural modernization, nor is collectivization the only way to resolve problems of rural class inequality (e.g. Hayami and Kikuchi 1981).

Fifth, Lenin, Stalin and Mao all believed that agriculture was characterized by lumpiness and economies of scale (Lenin 1899; Stalin 1929; Mao 1955). In many farm tasks, large scale is indeed an advantage, for example in research, processing, building and maintaining irrigation facilities. However, many modern farm inputs are divisible. Provided they are appropriately priced, credit is available and they have access to lumpy complementary inputs, all farm strata modernizing areas tend to acquire them (Hayami and Kikuchi 1981). Moreover, in large agricultural units labour supervision is a major problem (Bradley and Clark 1971). If a collective’s members trust each other and are motivated to work hard for the group irrespective of relative income then labour supervision is not an issue. However, this is rarely the case (Morawetz 1983) and collective farm managers have had to devise payment systems to motivate farm workers. In certain farm tasks (notably harvesting) it is easy to pay labour according to its product, but for most farm tasks it is more difficult than in industry to devise payment systems that strongly motivate from the work often requires a flexible response from the worker which is difficult to anticipate in the payment system; the final produce takes a long time to produce, with different workers’ contributions difficult to isolate; work is physically dispersed and production conditions vary greatly from one part of the production unit to another; the main task specializations are seasonal, and permanent minute sub-division of work into easily measurable segments is not generally possible. These problems have meant that under private agriculture, if labour is relatively abundant and capital relatively expensive, the normal outcome is for land to be rented out beyond a certain farm size, so that a relatively high output per acre can be attained through self-operating, self-motivated, rent-paying farmers, rather than cultivated with large numbers of hired workers. In collective farms, the attempt to supervise large numbers of farm workers has resulted in powerful managerial diseconomies of scale and reduced farm efficiency.

Collective agriculture has not performed well. Collective farms in the USSR in 1929–31 and in China in 1959–61 experienced massive institutionally caused declines in farm output, accompanied by demographic disasters (on the Soviet Union, see Volin 1970, ch. 10; on China, see Ashton et al. 1984). It is indeed, a terrible indictment of collective farming, that the worst famines of the 20th century have occurred under that system. The USSRs long-term growth of farm output has required colossal capital outlays so that by the 1970s, the agricultural sector was absorbing over one quarter of Soviet new fixed investment (Carey 1976). From the mid-1950s to the later 1970s Chinese farm output per caput was stagnant: ‘de-collectivization’ of agriculture in the early 1980s was accompanied by a huge in farm output (Nolan and Paine 1986).

The ‘socialist’ countries’ poor agricultural performances is in part attributable to shortcomings in the supply of industrial goods (Smith 1981). Part is also due to extensive state intervention in collective farms. However, there are fundamental problems in principle even with relatively independent collective farms. Large units (whether state, collective or private) are necessary to undertake activities exhibiting lumpiness or economies of scale. However, for many farm tasks powerful managerial diseconomies of scale exist, and even given favourable policies in other respects, in most circumstances this would prove a barrier to good performance of collective farms.

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